Question 1

A black market

Accepted Answer

A) can arise when government imposes a price ceiling below the market clearing price. 
B) can arise when government imposes a price floor below the market clearing price. 
C) was created when after hours trading was permitted on some stock exchanges. 
D) is a market where products with outdated expiration dates are sold. 
A) can arise when government imposes a price ceiling below the market clearing price. 
B) can arise when government imposes a price floor below the market clearing price. 
C) was created when after hours trading was permitted on some stock exchanges. 
D) is a market where products with outdated expiration dates are sold.

Question 2

An import quota for sugar results in an increase in

Accepted Answer

A) the domestic market price of sugar. 
B) the domestic demand for sugar. 
C) the domestic market supply of sugar. 
D) sugar imports. 
A) the domestic market price of sugar. 
B) the domestic demand for sugar. 
C) the domestic market supply of sugar. 
D) sugar imports.

Question 3

Suppose the market clearing price for gasoline is $4.75 per gallon.Now suppose that policy makers pass a law requiring that the maximum price that can be charged is $3.75 per gallon.Such a situation is an example of

Accepted Answer

A) a price control that will lead to a surplus of gasoline on the market. 
B) a price floor that will lead to a shortage of gasoline on the market. 
C) a price ceiling that will lead to a shortage of gasoline on the market. 
D) a price floor that will lead to a surplus of gasoline on the market. 
A) a price control that will lead to a surplus of gasoline on the market. 
B) a price floor that will lead to a shortage of gasoline on the market. 
C) a price ceiling that will lead to a shortage of gasoline on the market. 
D) a price floor that will lead to a surplus of gasoline on the market.

Question 4

A price floor represents

Accepted Answer

A) a maximum price that can be legally charged for a product or service. 
B) a minimum price that can be legally charged for a good or service. 
C) a lottery imposed upon producers by the government. 
D) a first come,first served mechanism for controlling prices. 
A) a maximum price that can be legally charged for a product or service. 
B) a minimum price that can be legally charged for a good or service. 
C) a lottery imposed upon producers by the government. 
D) a first come,first served mechanism for controlling prices.

Question 5

The way we know what commodities are relatively scarce or abundant is through

Accepted Answer

A) transaction costs. 
B) prices. 
C) price ceilings. 
D) price floors. 
A) transaction costs. 
B) prices. 
C) price ceilings. 
D) price floors.

Question 6

When prices are used as a rationing device,goods that are relatively more scarce than they used to be will have

Accepted Answer

A) greater demand. 
B) lower excess demands. 
C) higher prices. 
D) long queues. 
A) greater demand. 
B) lower excess demands. 
C) higher prices. 
D) long queues.

Question 7

-Refer to the above figure.If a price floor of $3 was set,

Accepted Answer

A) the quantity sold would be 80 units. 
B) there would be a surplus of 40 units. 
C) there would be a shortage of 40 units. 
D) there would be a shortage of 20 units. 
A) the quantity sold would be 80 units. 
B) there would be a surplus of 40 units. 
C) there would be a shortage of 40 units. 
D) there would be a shortage of 20 units.

Question 8

In the automobile industry,workers have just negotiated a new contract giving workers a large raise.There has also been an increase in the number of licensed drivers who are in the market for a new car.In the market for new automobiles,the effects that these changes will have on the equilibrium price and quantity are:

Accepted Answer

A) price will increase,and quantity will decrease. 
B) price will increase,and the effect on quantity is indeterminate. 
C) price will decrease,and quantity will increase. 
D) price will decrease,and the effect on quantity is indeterminate. 
A) price will increase,and quantity will decrease. 
B) price will increase,and the effect on quantity is indeterminate. 
C) price will decrease,and quantity will increase. 
D) price will decrease,and the effect on quantity is indeterminate.

Question 9

An increase in supply,other things being equal,will cause which of the following to occur?

Accepted Answer

A) quantity supplied to decrease. 
B) quantity demanded to increase. 
C) a rightward shift in the demand curve as the price falls. 
D) a leftward shift in the demand curves as the price increases. 
A) quantity supplied to decrease. 
B) quantity demanded to increase. 
C) a rightward shift in the demand curve as the price falls. 
D) a leftward shift in the demand curves as the price increases.

Question 10

For a given market demand curve,if the market clearing price decreases,then the amount of consumer surplus will

Accepted Answer

A) decrease. 
B) increase. 
C) become negative. 
D) none of the above due to insufficient information 
A) decrease. 
B) increase. 
C) become negative. 
D) none of the above due to insufficient information

Question 11

If supply decreases and demand increases,

Accepted Answer

A) the market clearing price definitely rises,and the equilibrium quantity falls. 
B) the market clearing price definitely rises,and the equilibrium quantity is indeterminate. 
C) the market clearing price definitely falls,and the effect on the equilibrium quantity is indeterminate. 
D) the effect on the market clearing price is indeterminate,and the equilibrium quantity definitely falls. 
A) the market clearing price definitely rises,and the equilibrium quantity falls. 
B) the market clearing price definitely rises,and the equilibrium quantity is indeterminate. 
C) the market clearing price definitely falls,and the effect on the equilibrium quantity is indeterminate. 
D) the effect on the market clearing price is indeterminate,and the equilibrium quantity definitely falls.

Question 12

In a market system,which component conveys information about what is relatively scarce and what is relatively abundant?

Accepted Answer

A) The number of producers 
B) The number of consumers 
C) Prices 
D) The amount of government regulation 
A) The number of producers 
B) The number of consumers 
C) Prices 
D) The amount of government regulation

Question 13

If a producer is willing to receive at least $5 for a pen that she manufactures but she actually receives $7 for it.The producer surplus of the pen for that producer is

Accepted Answer

A) $5. 
B) $2. 
C) $7. 
D) -$5. 
A) $5. 
B) $2. 
C) $7. 
D) -$5.

Question 14

The rationing function of prices refers to

Accepted Answer

A) the situation when government must intervene in a market when there is a large shortage or surplus. 
B) the synchronization of decisions by buyers and sellers that leads to an equilibrium. 
C) the synchronization of decisions by buyers and sellers through the direction of government agencies. 
D) the situation when only the rich get the goods they want. 
A) the situation when government must intervene in a market when there is a large shortage or surplus. 
B) the synchronization of decisions by buyers and sellers that leads to an equilibrium. 
C) the synchronization of decisions by buyers and sellers through the direction of government agencies. 
D) the situation when only the rich get the goods they want.

Question 15

During the Winter Olympics in Vancouver,some residents rented rooms to visitors.This behavior

Accepted Answer

A) helped reduce the shortage of hotel rooms caused by the high demand during the Olympics. 
B) reduced the demand for tickets to the Olympics since many local residents left town while they rented out space in their homes. 
C) hurt the hotel market in Vancouver in the long run because new hotels that should have been built were not built for the Olympics. 
D) raised the demand for hotel rooms in Vancouver and should have been prevented by the city of Vancouver. 
A) helped reduce the shortage of hotel rooms caused by the high demand during the Olympics. 
B) reduced the demand for tickets to the Olympics since many local residents left town while they rented out space in their homes. 
C) hurt the hotel market in Vancouver in the long run because new hotels that should have been built were not built for the Olympics. 
D) raised the demand for hotel rooms in Vancouver and should have been prevented by the city of Vancouver.

Question 16

Who benefits primarily from rent controls?

Accepted Answer

A) Construction workers 
B) Poor people looking for low-income housing 
C) All who want to rent 
D) Only renters who are able to get units at below-market rates 
A) Construction workers 
B) Poor people looking for low-income housing 
C) All who want to rent 
D) Only renters who are able to get units at below-market rates

Question 17

What is the result of an agricultural support price established above the equilibrium price?

Accepted Answer

A) The market gravitates toward and remains in equilibrium. 
B) There will be excess quantity supplied of the product involved. 
C) There will be excess quantity demanded the product in this market. 
D) Since the support price is set above the equilibrium price,it will have no impact on the market price. 
A) The market gravitates toward and remains in equilibrium. 
B) There will be excess quantity supplied of the product involved. 
C) There will be excess quantity demanded the product in this market. 
D) Since the support price is set above the equilibrium price,it will have no impact on the market price.

Question 18

If supply and demand both simultaneously increase,

Accepted Answer

A) the market clearing price definitely rises,and the equilibrium quantity definitely falls. 
B) the market clearing price definitely rises,and the effect on the equilibrium quantity is indeterminate. 
C) the market clearing price definitely falls ,and the effect on the equilibrium quantity is indeterminate. 
D) the effect on the market clearing price is indeterminate,and the equilibrium quantity definitely rises. 
A) the market clearing price definitely rises,and the equilibrium quantity definitely falls. 
B) the market clearing price definitely rises,and the effect on the equilibrium quantity is indeterminate. 
C) the market clearing price definitely falls ,and the effect on the equilibrium quantity is indeterminate. 
D) the effect on the market clearing price is indeterminate,and the equilibrium quantity definitely rises.

Question 19

Prices provide the rationing function best when

Accepted Answer

A) prices are flexible. 
B) prices are inflexible. 
C) they are used in conjunction with queuing. 
D) price controls are in place and ration coupons are used too. 
A) prices are flexible. 
B) prices are inflexible. 
C) they are used in conjunction with queuing. 
D) price controls are in place and ration coupons are used too.

Question 20

In 2010,a British Petroleum oil rig exploded in the Gulf of Mexico.The explosion resulted in a major oil spill and a decrease in the supply of oil.At the same time,the average price of gasoline decreased.Which of the following best explains the decrease in the price of gasoline?

Accepted Answer

A) The quantity demanded of gasoline increased. 
B) The demand for gasoline decreased,and the effect of the decrease in demand on the gasoline price was greater than the price effect of the decrease in supply. 
C) The demand for gasoline increased,and the effect of the increase in demand on the gasoline price was less than the price effect of the decrease in supply. 
D) The demand for gasoline remained unchanged. 
A) The quantity demanded of gasoline increased. 
B) The demand for gasoline decreased,and the effect of the decrease in demand on the gasoline price was greater than the price effect of the decrease in supply. 
C) The demand for gasoline increased,and the effect of the increase in demand on the gasoline price was less than the price effect of the decrease in supply. 
D) The demand for gasoline remained unchanged.

A black market

An import quota for sugar results in an increase in

Suppose the market clearing price for gasoline is $4.75 per gallon.Now suppose that policy makers pass a law requiring that the maximum price that can be charged is $3.75 per gallon.Such a situation is an example of

A price floor represents

The way we know what commodities are relatively scarce or abundant is through

When prices are used as a rationing device,goods that are relatively more scarce than they used to be will have

-Refer to the above figure.If a price floor of $3 was set,

An increase in supply,other things being equal,will cause which of the following to occur?

For a given market demand curve,if the market clearing price decreases,then the amount of consumer surplus will

If supply decreases and demand increases,

In a market system,which component conveys information about what is relatively scarce and what is relatively abundant?

If a producer is willing to receive at least $5 for a pen that she manufactures but she actually receives $7 for it.The producer surplus of the pen for that producer is

The rationing function of prices refers to

During the Winter Olympics in Vancouver,some residents rented rooms to visitors.This behavior

Who benefits primarily from rent controls?

What is the result of an agricultural support price established above the equilibrium price?

If supply and demand both simultaneously increase,

Prices provide the rationing function best when

In 2010,a British Petroleum oil rig exploded in the Gulf of Mexico.The explosion resulted in a major oil spill and a decrease in the supply of oil.At the same time,the average price of gasoline decreased.Which of the following best explains the decrease in the price of gasoline?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 4: Extensions of Demand and Supply Analysis

A black market

An import quota for sugar results in an increase in

Suppose the market clearing price for gasoline is $4.75 per gallon.Now suppose that policy makers pass a law requiring that the maximum price that can be charged is $3.75 per gallon.Such a situation is an example of

A price floor represents

The way we know what commodities are relatively scarce or abundant is through

When prices are used as a rationing device,goods that are relatively more scarce than they used to be will have

-Refer to the above figure.If a price floor of $3 was set,

An increase in supply,other things being equal,will cause which of the following to occur?

For a given market demand curve,if the market clearing price decreases,then the amount of consumer surplus will

If supply decreases and demand increases,

In a market system,which component conveys information about what is relatively scarce and what is relatively abundant?

If a producer is willing to receive at least $5 for a pen that she manufactures but she actually receives $7 for it.The producer surplus of the pen for that producer is

The rationing function of prices refers to

During the Winter Olympics in Vancouver,some residents rented rooms to visitors.This behavior

Who benefits primarily from rent controls?

What is the result of an agricultural support price established above the equilibrium price?

If supply and demand both simultaneously increase,

Prices provide the rationing function best when

In 2010,a British Petroleum oil rig exploded in the Gulf of Mexico.The explosion resulted in a major oil spill and a decrease in the supply of oil.At the same time,the average price of gasoline decreased.Which of the following best explains the decrease in the price of gasoline?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters